How the Age of Tweaking Impacts Hotel Operations

One of the better articles I read among the avalanche of tributes and rebukes after Steve Job’s passing was Malcolm Gladwell's "The Tweaker" in the New Yorker (free access). In essence, Gladwell distilled Job’s talent as that of being a master tweaker, who was compelled to make what already existed better, such as the ordinary digital music player which became the superior iPod, or a chunky Microsoft tablet PC, which Jobs tweaked into the sleek iPad.

But what was actually more interesting to me in this article was how Gladwell spelled out the clear distinction between inventor and tweaker. It’s not rocket science, but reading it I realized that we indeed live in the Age of Tweaking, rather than in the Age of Invention.

I took this concept to a recent conference here in Hong Kong, The World Research Summit for Tourism, where I was, sadly, the lone industry speaker among 300 or so academics from all over the world. The gist of my presentation was that in the Age of Tweaking, the underlying technology becomes more important than ever.

The above diagram shows how media platforms and innovation have evolved over the past 120 years or so. What you can see clearly here is that the media landscape has changed more in the past 5 years than it had the 100 years before that. And as we were heading towards the end of the 20^th century, content increasingly started to migrate across different media networks and platforms, including the TV mobile, web or even games platforms. So why is that? It’s because we have moved from the Age of Invention, to the Age of Tweaking. The TV was an invention, but the connected TV is a monumental tweak of the underlying invention.

When you look at how long it took for entertainment devices to gain a market share of 50 million, you’ll get a picture like this:

What’s striking is that from the point the internet went mainstream, the tweaking of communication accelerated and adoption of new applications climbed to unprecedented levels, as witnessed by Facebook and Twitter’s subscriber explosion. It’s clear that the internet created an environment of building blocks that gave new meaning to Product Life Cycle 101: Tweaking, which builds on something that is already familiar, makes adoption much easier than something that is invented from scratch and has to be heavily marketed to build familiarity and adoption.

So in other words: the more you tweak, the quicker the adoption and faster commercial gains.

Looking at some of the recent inventions that did not get off the ground underlines this. Time Magazine a while ago published a list of the worst inventions of all times, which contains some poignant examples of how invention can fail despite a brilliant and complex technology.  The Segway people mover is a classic example. I wonder if it failed because, as a new invention, it was too much of a stretch for people to learn how to use it. Who knows if we might see the technology emerge in another form, sometime in the future, with a bit of creative tweaking. 

Let’s look at what actually happened when the internet entered the mainstream. I’m not talking about being able to Google something or send emails. I am talking about Internet Protocol as a delivery technology. IP has touched all industries and walks of life because of its more adaptive attributes, lower networking, equipment and administration costs, centralized network control and management and better communications capabilities, productivity and flexibility. These advantages are particularly important for a hotel operation that has to handle many different technologies efficiently, including energy, security and communication.

In fact, IP is probably the king of tweakable technologies, because of its flexibility and capability which is why it will remain the key enabler of technology delivery for the foreseeable future. The important part here is that the underlying technology platform comes first, applications second. If you have a powerful enough technology platform that can be tweaked to accommodate future needs, you will be able to accommodate the next wave of tweaked applications as they enter the mainstream. Don’t forget, predictions put the number of connected devices in the market in the coming years in the trillions and China alone will have nearly 5 billion connected devices by 2020.

So as time to market for technology innovation continues to contract dramatically, hotels more than ever have to be flexible. But innovation is set to be facilitated by tweaking rather than inventing, so it’s important to focus on the underlying technology that will support tweaked technologies. With IP, we have a very robust technology now, and hoteliers should focus on the knowledge and technology available today to lay the foundations for the future. A robust technology will enable adding new applications in the future without major investment and with short time frames.

Facebook and the $100 Billion Dollar Question

There seemed to be a collective breath holding going earlier this week when it was reported that Facebook is apparently planning an IPO in the first half of next year to the tune of $10 billion, which would value the company a cool $100 billion. If successful, it would also be the largest tech IPO in history, but merely the fourth largest ever; still not bad for a company that wasn’t even around 8 years ago. 

Some of the reports couldn’t resist the “Dr Evil” reference, that line in the first Austin Powers movie where the numeracy challenged Dr Evil proposes to hold the world ransom for $100 billion. However, compared with the amounts that we are bombarded with on a regular basis these days, a mere $100 billion seems like a piggy bank of small change. Greece is threatening to buckle under a 340 billion Euro debt, the US government bailing out the financial community to the tune of $700 billion in 2008, and of course now facing a $15 trillion deficit as at November 17, 2011 (take that Dr Evil!). These types of numbers seem to be rolling off everyone’s tongue as if discussing the latest petrol prices. While many lay people may still gasp in awe at the likely Facebook valuation, my guess is that very few are able to take it beyond its abstract meaning of “a whole lot of money”. 

So let’s just quickly clarify what we are actually dealing with. Wallstats.com puts the cost of waging 48 hours of war in Iraq and Afghanistan at one billion dollars, which puts the $15 trillion US-deficit somewhat in perspective. The site usdebt.kleptocracy.us on the other hand, does a great visualization of various astronomic amounts, of which the One Billion Dollar one looks like this:

So now that we have established beyond doubt that we are talking about more money than you can reasonably carry away in a bank robbery, let’s go back to Dr Evil and look at the ransom part. There is actually a bit of irony in there that I find much more irresistible than the dollar amount itself. 

The vast amount of intimate information Facebook now has available about its users worldwide is such that if it was a government agency, it would pose an internal security risk for any country that has a sizeable Facebook user community (which excludes, notably, China). So with vast amounts of sensitive intelligence and deep pockets, you may indeed be forgiven to think that there is something slightly creepy going on. But maybe that’s because (disclosure) I don’t do Facebook. 

The notion that you give your personal data (and then some) voluntarily over to a commercial corporation, whose intentions about what it plans to do with it are less than clear, and then go out to buy into the company once it goes IPO sounds almost like buying back what you have given for free. But who knows, maybe Facebook won’t get the $10 billion IPO, or even if, maybe it won’t hold its value after the launch which in the current economic climate is quite possible. Just this week it was reported that companies that listed in the US this year had lost an average of 10% of their value after debuting. And that includes coupon-seller Groupon, whose shares have now fallen below their initial price, as well as music streaming site Pandora Media.

There will no doubt be a great deal of analysis and debate about whether Facebook is actually worth $100 billion. But whichever way it goes, the IPO (if it is true) sends a powerful signal to the industry. It implies that the company, just like other entertainment and communications technology companies is  poised to continue to thrive, no matter whether there’s a deadlock in the Senate or the Eurozone breaks up. Quite to the contrary. It seems that the more dire the circumstances, the more we collectively flee into the haven of entertainment, even if it is just for a short while. The record 42 billion online videos watched by US citizens in October this year speak for themselves, and so do the reports that despite the general doom and gloom telcos are set to profit from stable growth in the coming years.  On the whole, it looks like it’s statistically proven that we love to be entertained when we are happy and we also spend money to be entertained when we are sad.

Of course, as the entertainment sector bucks the trend and becomes the shining example of successin an otherwise faltering economy, things will get a lot more competitive for a share of the spoils.  Many other operators, currently on the industry fringes may just muscle their way in. For companies already in the entertainment and communications technology space this means just one thing: innovate or perish.

Technology firms on ‘litigious rampage’ stifle consumer choice

After Apple filed 10 lawsuits in a variety of countries against Google, claiming patent infringement, it seems Facebook’s launch of a mobile web platform this week, which is a direct challenge to Apple’s (and others’) control of their ecosystem, may ring in another round of what some fellow bloggers call the company's "lawsuit rampage".

Of course you can argue that Apple just puts upon everyone else what has and is being put on them by others. A simple online search reveals the multitude of suits and countersuits, class actions, trademark infringements and even libel disputes the company has had to fend off over the years by anyone from the Beatles and patent trolls to consumers, resellers and, of course, competitors large and small.
 

While Apple seems to be the most active and gets most of the publicity lately, other tech firms are not slow to unleash lawsuits on anyone, particularly if it throws a spanner in the works of its competitors’ operations. Think about Oracle’s patent infringement lawsuit against Google over Java last year, or the 2009 action Skype’s ousted founders brought against eBay over key P2P technology that was not part of eBay’s purchase of the VoIP provider in 2005.

Technology as an industry is heavily dependent on innovation and in an increasingly saturated world even the smallest new feature can potentially mean a big difference on the balance sheet. It is understandable therefore that technology companies are concerned with protecting their assets. But I wonder if rather than spending time and money sparring – often in vain – with their peers, companies should concentrate more on delivering the products and services that attracted consumers to them in the first place.

One of the reasons tech companies increasingly choose a legal option may lie in the confusion between patents, which can include proprietary rights, and copyrights, which can’t, leaving a lot of room for interpretation. In addition, with business interests now firmly being played out on a global scale, different countries, court systems and their respective interpretations of law further muddy the waters.

Tech companies are of course not the only ones finding themselves facing a court room over copyright issues. The slipperiness of its definition was recently demonstrated when Australian band Men at Work lost a law suit that alleged their 1981 world smash hit “Down Under” ripped the signature flute riff off a popular ditty written in the 1930s. While as far as I am concerned the flute riff is as close to “Kookaburra” as Doris Day is to Rihanna, the courts had a different opinion and the band now has to hand over 5% of profits from the 1981 song to the publishers of the 1930s song.

Back in the tech world, one of the more interesting copyright decisions the courts have handed down over the years is actually Apple vs Microsoft concerning certain GUI elements. Apple lost on the grounds that the GUI elements were either unoriginal to Apple, or were the ”only possible way of expressing a particular idea”.

This bears certainly similarities to Apple’s current court clash with Samsung over the latter’s Galaxy tablet, which Apple says looks identical to its iPad. But Apple is not the inventor of the tablet computer and a touch tablet has to have a rather large screen as much as a car has to have a motor. And here’s the crux: It’s the difference in horse power under the hood, quality of materials used and varying ranges of gadgets available that not only make a car, but every technical device unique and recognisable. Apple so far has been exceptionally successful in transforming itself from an equipment manufacturer to a true entertainment company that owns almost its entire ecosystem. This, not sleek design or form factor, is first and foremost the reason why the company is such a trail blazer and the envy of every telco and equipment manufacturer that keeps struggling to move up the value chain.

Technology may be a vastly complex field when it comes to copyright and intellectual property issues. However as the users of the technology that’s being fought over just now, we have to ask ourselves what is in our best interest. As the saying goes, consumers win with competition and lose when competition is stifled, which is what these lawsuits essentially are aimed at.
 
Looking at how many suits got retracted or thrown out over the years on the grounds of being baseless, litigious companies’ actions increasingly look like vengeful tantrum throwing rather than serious attempts at minimizing purported commercial damage that is based on provable offences. As the creator of the Java technology Oracle and Google fought over last year put it so succinctly, these types of lawsuits are all about ego, money and power.

He’s got a point. With success rates for these types of lawsuits checkered, it is questionable whether the vast legal fees generated by them warrant the outcome. So when excessive lawsuits bog down the courts and new products are being kept away from consumers during lengthy appeals processes, the only winners – no surprises here - seem to be the lawyers.

What has all this to do with hospitality? Well, plenty. In a world where there is a chance that a particular technology, feature or piece of hardware may no longer be available and thus no longer supported poses a risk to providers and consumers alike. It underscores the importance of a flexible approach when deploying technology. Think about the anxiety Google’s purchase of Motorola Mobility continues to cause handset manufacturers that use Android as their O/S. Despite Google pledging its commitment to its handset manufacturing partners, I am sure some of them are looking at a plan B should Google claim the monopoly on Android for itself.

So designing your system as open as possible will go a long way to safeguard your technology platform against not only litigious companies and their well paid lawyers, but also against unexpected shifts in technology trends.

Hotels should make the most of tablets with advanced video offers

Adoption of smartphones and other personal connected devices such as tablets are soaring in all corners of the world, but nowhere more so than in Asia, where Nielsen sets the interest in buying one in the next 12 months at a whopping 50%. The question now seems to be not when people will buy such a device, for that seems to be inevitable, but what they’re most likely use it for.

Early usage patterns show that smart device users tend to consume twice as much media as others and according to In-Stat, 86% of them are using them to watch video. Savvy hoteliers should take note of these figures as they give valuable insights to their guests’ preferences and provide an opportunity to offer powerful value added services.

Most higher-starred hotels around the world have launched smartphone and tablet-specific applications that mainly offer booking functions, facility information and guest services, but precious few offer what guests probably most likely want while staying at a hotel, which appears to be video content, if statistics are to be believed.

There are two main reasons for this. Firstly, most vendors who offer tablet applications or hospitality-specific video solutions haven’t got the technical capabilities to offer such a service. To be able to offer video services for tablets or second screens, particularly live video, requires a vendor to own or be part of the whole IPTV ecosystem within the hotel, which is only possible with a thorough understanding of Walled Garden IPTV, Mobile TV and Broadcast TV, and years of working experience with service provider platforms. This is something not easily achieved which is why most vendors in the market today are merely able to provide a hotel web portal for tablets, rather than fully fledged video services.

Secondly, the fact that offering these services within the hotel requires essentially a telco-grade solution has created the perception that it must be complicated and expensive to deploy.

But this is actually not the case. Yes, for second screen video services hotels need a robust IPTV-based video platform, with cost effective encoding and transcoding capabilities in the headend, as well as a carefully deployed network of wireless access points throughout the hotel (or at least in those areas hotels want guests to do so, which may not include the Michelin-starred restaurant).

But this type of solution may be more affordable than many hoteliers think, as a lot of telco-grade equipment to which this type of streaming capability was traditionally restricted, has now been re-engineered for the enterprise world with a suitable price tag to match (offered, for example, by MVI Systems). So for hoteliers it would certainly pay to shop around and ask the right questions when choosing their IT technology partner.

Watching a sports game on your tablet in the bar while you are having a quiet drink, catching up on the latest news from CNN while you are having breakfast or watching a VoD movie to make your workout at the hotel gym less daunting: all of these things guests would be able to do with a video enabled connected device system may sound already very attractive in their own right. But hoteliers should consider that this type of service is actually very unique even outside the hotel environment – not even mobile operators are able to replicate this type of service at this point in time.

While mobile operators today are able to offer reasonable quality TV and video services on regular smartphones, they are still a long way away from being able to offer high quality mobile video on a tablet or even a mobile phone with a larger screen, due to bandwidth constraints. Even with the imminent roll out of LTE technology in many countries within Asia it will take years for operators to be able to develop anything that resembles a fully fledged, stable and reliable big screen mobile TV service. Large screens, by the way, are a major trend for smartphones according to researcher Mintel, which found that 27% of survey respondents wished their phone screens were larger and that the 4″ smartphone screen is quickly becoming standard.

So hotels have a real opportunity here to wow their guests with a unique technology application that not even a mobile operator can offer.

Internet charges in hotels II: finding the middle ground in the multi-device world

In my last blog I mentioned some measures hotels can take to balance internet charges with guest expectations, so in this blog I’d like to get into more detail on what these actually are.

Whenever there are new research results released on what guests want in a hotel room (and there seems to be an abundance of these right now), one message is repeated again and again from Rio to Rabat and Berlin to Beijing: strong, fast internet access and for free, please. In a world where connectivity is taken for granted, and much information and other content provided for free, this is an understandable expectation – much like I imagine it became a standard to have a TV set in a hotel room, provided at no cost to the guest, 50 odd years ago.

If you are working in the hospitality technology space, it’s about now you may be inclined to feel a little nostalgic about those days when the highest tech gadgets in the room were a colour TV and a basic internet connection to let you cover off emails while one of 20 channels keeps you company in the background. The fact that these times don’t seem all that long ago reinforces that entertainment consumption and access has changed more in the past 5 years than it had in the 100 years before, a process that shows no signs of abating any time soon. 

The figures supporting these changes are truly staggering. If one billion new Internet users and 1 zettabyte (yes it’s a real word - over 1 trillion gigabytes) of Internet traffic in the next 4 years, as Intel predicted recently, are a bit too abstract to process, go to your average electronics retailer to see that it’s increasingly difficult to find consumer electronic devices that are NOT Wifi enabled – and I am not talking of the obvious e-readers, tablets or Blu-ray players here. Samsung just recently released its RF4289 refrigerator which comes with an 8-inch touchscreen and connects to the internet over WiFi, making Cisco’s prediction that there will be 15 billion connected devices by 2015 a lot more believable.

It is no wonder, and I suppose inevitable, that our fascination with the gadget, our connectivity addiction and the ubiquity of both is affecting the hospitality industry. Whether it is one conspicuous individual, traveling with laptop, iPad and smartphone, all vying to be “plugged” in to broadband access, or the modern family with its individual family members wanting to connect their respective devices when staying in the same room: the flood of connected devices will create a headache for hotels who, on one hand have to manage bandwidth cost, but on the other hand risk alienating their guests with escalating per-device charges.

But the industry is starting to experiment with alternatives. An increasing number of hotels choose to offer internet Free to Guest (FTG) as a marketing and branding tactic. While this will no doubt keep multi-device travelers happy, it may create serious bandwidth issues down the line if you read a recent In-Stat survey which says about 86% of tablet and smartphone owners are using them to watch video. Some hotels I have encountered in the region that offer internet FTG have started to warn their guests that if the amount of traffic a guest incurs exceeds a certain threshold it will cut access or move it to a lower tier. Whether this is real or just a threat I am not entirely sure (I’ve never been cut off), but personally I don’t believe that threatening your guests is a particularly effective measure if you are operating in a fiercely competitive service industry.

One of the areas where hotels can get some inspiration may be the airline industry and the way premium airlines handle their in-flight entertainment. Anyone who is familiar with the content industry knows that the VoD content on offer on flights has to be paid for through minimum guarantee and/or revenues share agreements with the relevant studios. Airlines recoup these costs (and then some, presumably) through advertising and absorbing them in the ticket price, which means they are not visible for customers who assume the content is offered to them for “free”, which creates a positive brand image. Perception is everything, so why not adopt the same principle for internet access in hotels rather than shoving the unpopular charges in guests’ faces? Based on historical data, hotels can average out bandwidth usage and spread the cost evenly across all room charges.

But it may be inevitable for hotels to introduce more predictable ways to manage their bandwidth costs while at the same time meeting guest expectations and corporate quality standards. One way of doing so is for hoteliers to look to the telco space where tiered systems with different Classes of Service (CoS) have been in use for some time. There are some similarities already inherent in High Speed Internet Access commonly deployed in hotels. The HSIA in hotels is predominantly built on a centralized gateway to the internet that effectively resembles an Edge Router, which in the telco world is commonly used as a single point of traffic management enabling different CoS to be applied to different users. While telco-class edge routers would be overkill for comparatively small operation like a hotel, there are a number of enterprise-class solutions available that are more suitable for hotels.

On the other hand, some major network equipment vendors have started to provide CoS capability with a software upgrade which eliminates the necessity for edge router-type equipment completely. While their solutions thus far are targeted to the telco world, it shouldn’t be long before lower-end versions will be made available to enterprise applications.

Either way, hotels need to get creative to bridge the gap between guest expectation and commercial reality and to do so, it is necessary to include both technical as well as strategic considerations to find the solution that benefit a hotel’s individual needs.

To charge or not to charge... hotels’ dilemma over Internet access fees

There’s a lot of discussion out in the cloud about Internet access fees hotels are or aren’t charging and what the potential pitfalls are for those hotels that are seen as overcharging for access to the online world. As with many other issues that touch on the sensitive part of you parting with your money, there’s more than just one side to the story.

One of the points I find missing from the current discussions is behavioural conditioning. Of course, everyone wants a good deal, but the “everything is free” culture that now dominates the Internet has entered many aspects of life and this mindset, once ingrained, is difficult to change. The earliest culprits responsible for this development were the telcos who happily introduced all-you-can-eat broadband data-plans which encouraged people to download anything regardless of its bandwidth. However, regret followed swiftly when video overtook email and surfing as the largest consumer of internet bandwidth. This was amplified by the recent onset of serious gadget-lust triggered by smartphones and tablets. So it’s not surprising that we now see telcos far and wide wanting to withdraw their generosity and shepherd users back into the user-pays model.

These issues have of course serious implications for the hospitality world. Free WiFi has now shot past complimentary breakfast as a “must have” according to a 2010 survey of 53,000 US travelers (although I would argue that in Asia it’s still the other way round), indicating that we now regard basic internet access much like the complimentary water in the room. While free Wifi access has traditionally been the domain of newer and smaller hotels where infrastructure and bandwidth demands are relatively smaller, even luxury hotels, particularly here in Asia, are starting to seriously respond to this trend. In recent months, most of the big luxury chains have added free internet access as part of their loyalty programs, which are usually free to join, such as Marriott’s, while Shangri-La Hotels and Resorts even went one step further and now offers free WIFI and wired internet to all guests regardless of loyalty membership.

While this Free to Guest (FTG) internet trend casts a medium to long term disruption to HSIA hospitality service providers whose business models rely heavily on internet revenue share, hotels have a number of very good reasons to pursue this approach. Some of the hotels we have spoken to confirmed a greatly reduced complaint rate since introducing FTG, implying that people are less likely to complain about even slow or patchy connections if it is offered for free. This of course reduces the need for support resources and thus has an impact on overall costs. Another reason is brand equity. A large luxury chain’s brand essentially represents the overall guest experience, so FTG internet can become an important part of the hotel’s brand equity.  

But it’s at the point where usage patterns accelerate from surfing the net and emailing to streaming movies and doing video conferencing that internet access moves from a marketing tool to a much more complex issue. While using load balancing to move WiFi traffic across access points to even out demand may be a relatively simple way to keep Wifi free within reasonable bandwidth constraints, a tiered ‘freemium’ model where bandwidth usage up to a certain point is ‘free’ before charges kick in, may be a better way to address the problem of bandwidth heavy video clogging your network while still keeping broadband revenues on the balance sheet. This type of user-pays system mimics the one telcos have employed which has become very familiar to consumers and is likely to be readily accepted (I will return to the subject of tiered access in more detail in a later post). But either way, a chargeable service model will be unavoidable once OTT becomes a ubiquitous, mainstream content delivery platform, although this is yet a few years away.

Speaking of telcos though: if hotels are not already thinking about the issues above, they may consider that many mobile operators, particularly in Asia, are now offering prepaid data access packages for a fixed fee per day, even when roaming. During my last visit to Taiwan, I paid NT$700 (US$24) for voice and 5 days worth of 3G data access, which beat the US$15 per day internet access my hotel tried to charge me by several miles.

At the end of the day a hotel is a business and needs to make money for sure, but its raison d’être is to make guests comfortable, which may be a delicate balancing act when it comes to internet access charges, but one that I believe can be addressed with a careful look at the hotel’s strategy, infrastructure issues and brand values.